Contribution
No, I do not imagine the Treasury will have a veto, but I think it will keep a careful eye on the work of GBE. I have already mentioned in previous debates the number of controls that will be in place.
Noble Lords argue this many ways around, but we are trying to reach a middle ground where we get the benefits of a company with people on the board who are very experienced in this area making hard-headed commercial decisions, because we want GBE to be successful and to make a profit. On the other hand, it is also a public sector body accountable to the Secretary of State and therefore subject to the normal public sector controls. The skill of the GBE board will be to find a way through this, and that is why we wish to give it as much operational independence as possible.
At the risk of repeating myself on the cost issue, in its whole-system analysis undertaken for the previous Government, my department concluded that a renewables-led system, complemented by flexible technologies to ensure that supply and demand are balanced, alongside technology such as nuclear, would form the cheapest foundation for a future decarbonised power grid. Since that analysis was published, a range of external commentators, such as Energy Systems Catapult and the Climate Change Committee, have published analysis which reaches similar conclusions.
Noble Lords have quoted Dieter Helm and other commentators but I believe that there is a general consensus on the broad make-up of the most cost-effective future systems, although there will be some disagreement over potential technologies in future. For instance, the noble Lord, Lord Hamilton, raised hydrogen, and, in our short debate on small modular reactors in the House this afternoon, there was a question about value for money in their development. I readily accept that; however, we think that the general mix is the most cost-effective way to go forward.
Amendment 118B seeks to add after Clause 7 a new clause that would prevent GBE investing in any project that relies wholly or in part on government subsidies. I am not in favour of that. First, GBE is operationally independent, so commercial investment decisions need to be made separately from government decisions on subsidy provision. Secondly, GBE will be focused on driving clean energy deployment through its functions. The Government provide different subsidies in different ways across the energy market, so limiting GBE’s activities to areas where there are no government subsidies would unnecessarily constrain the company.
Coming back to a point from the noble Lord, Lord Hamilton, the advice we have had from the Climate Change Committee is that CCUS would enable us to have the lowest-cost pathway to net zero. It described it as
“a necessity, not an option”
for maintaining our climate commitments.
The way in which GBE will interact with existing and new government policies and influence the energy system will clearly be determined on a case-by-case basis. We will clarify the relationship between existing schemes and GBE in due course. I assure the Committee that we are currently seeking advice on Great British Energy’s compliance with the Subsidy Control Act in both its establishment and operation.
Amendments 129 and 130 propose additions to Clause 8. In essence, they seek to delay the commencement of the Act until the Secretary of State publishes a report on the appropriateness of further government subsidy for offshore wind developments, as well as a comprehensive report detailing the full costs to consumers and taxpayers of the UK renewable energy industry. Noble Lords will not be surprised to hear that I resist these amendments. We want to see Great British Energy get set up as quickly as possible and get on with the job. Frankly, I do not see it as necessary for those reports to be published.
On Amendment 129, as I said in our debate on the previous group, we are committed to increasing radically the deployment of offshore wind, which provides us with secure, domestically generated electricity. As I have already mentioned, we want 42 to 50 gigawatts of offshore wind by 2030, up from 15 gigawatts today. The contracts for difference scheme is the Government’s main mechanism for supporting new renewable electricity generation projects. We continue to evolve that scheme to ensure that it is aligned with the Government’s wider objectives. In addition, the clean power action plan that we published last year reconfirmed our view, and that of NESO, that clean power can be delivered by 2030 without increasing costs to the consumer and with scope for lower bills.
Overall, I really think that GBE should now be allowed to get on with the job. I do not believe that putting in amendments that would prevent it investing in schemes that attract subsidies is the right way forward. The Government would certainly resist that.